Scribd
Upload
148 views

Income Tax Topic: Case Number: Case Name:: G.R. No. L-53961 NDC vs. Cir

This case involves the National Development Company (NDC) being held liable for taxes on interest payments made to Japanese shipbuilders for the construction of ocean-going vessels. Specifically: 1) NDC entered contracts with Japanese shipbuilders to construct 12 vessels, with payments made initially in cash and letters of credit and later via promissory notes guaranteed by the Philippines. 2) When the vessels were completed, NDC paid the shipbuilders $4,066,580.70 in interest but did not withhold any taxes. 3) The Commissioner held NDC liable for 5,115,234.74 in taxes for the unpaid withholdings. The Court of Tax Appeals upheld this decision.

Uploaded by

John Dexter Fuentes
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
148 views

Income Tax Topic: Case Number: Case Name:: G.R. No. L-53961 NDC vs. Cir

This case involves the National Development Company (NDC) being held liable for taxes on interest payments made to Japanese shipbuilders for the construction of ocean-going vessels. Specifically: 1) NDC entered contracts with Japanese shipbuilders to construct 12 vessels, with payments made initially in cash and letters of credit and later via promissory notes guaranteed by the Philippines. 2) When the vessels were completed, NDC paid the shipbuilders $4,066,580.70 in interest but did not withhold any taxes. 3) The Commissioner held NDC liable for 5,115,234.74 in taxes for the unpaid withholdings. The Court of Tax Appeals upheld this decision.

Uploaded by

John Dexter Fuentes
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Income Tax

Topic:
Case Number : G.R. No. L-53961
Case Name: NDC Vs. CIR

FACTS
  The national Development Company entered into contracts in Tokyo with
several Japanese shipbuilding companies for the construction of twelve ocean-
going vessels.  The purchase price was to come from the proceeds of bonds
issued by the Central Bank.  Initial payments were made in cash and through
irrevocable letters of credit.  Fourteen promissory notes were signed for the
balance by the NDC and, as required by the shipbuilders, guaranteed by the
Republic of the Philippines.  Pursuant thereto, the remaining payments and
the interests thereon were remitted in due time by the NDC to Tokyo. The
vessels were eventually completed and delivered to the NDC in Tokyo.  Initial
payments were made in cash and through irrevocable letters of credit. When
the vessels were completed and delivered to the NDC in Tokyo, the latter
remitted to the shipbuilders the amount of US$ 4,066,580.70 as interest on the
balance of the purchase price. No tax was withheld. The Commissioner then
held the NDC liable on such tax in the total sum of P5,115,234.74.
Negotiations followed but failed. NDC went to CTA. BIR was sustained by CTA.
BIR was sustained by CTA. Hence, this petition for certiorari. 

ISSUE/S

Whether or not NDC is liable for the tax.

HELD

Yes.
Although NDC is not the one taxed since it was the Japanese shipbuilders who
were liable on the interest remitted to them under Section 37 of the Tax Code,
still, the imposition is valid. 

The imposition of the deficiency taxes on NDC is a penalty for its failure to
withhold the same from the Japanese shipbuilders. Such liability is imposed by
Section 53c of the Tax Code. NDC was remiss in the discharge of its obligation
as the withholding agent of the government and so should be liable for the
omission. 

You might also like